American States Water Company (NYSE: AWR) has just announced a significant development for its subsidiary, Golden State Water Company (GSWC), as the California Public Utilities Commission (CPUC) has approved a deferral for the cost of capital application. This approval means that GSWC's next cost of capital application, originally scheduled for May 1, 2026, has been postponed by a year until May 1, 2027, with the corresponding effective date of January 1, 2028.
The CPUC has also granted permission for the current water cost of capital mechanism to remain in place during this one-year deferral period. As a result, GSWC's current authorized rate of return on rate base, which stands at 7.93%, will continue in effect through December 31, 2027. This 7.93% return on rate base comprises a return on equity of 10.06%, an embedded cost of debt of 5.1%, and a capital structure with 57% equity and 43% debt.
These developments are part of a joint request made by GSWC and three other investor-owned California water utilities, and the approval by CPUC marks a significant shift in the timeline for cost of capital applications and the associated rate of return on rate base. As a result of these announcements, the company's shares have moved -1.19% on the market, and are now trading at a price of $71.50. Check out the company's full 8-K submission here.
